Currently, the US military and foreign policy departments are implementing the European Recapitalization Incentive Program (ERIP). Its purpose is to help European states purchase military products from American suppliers. Several contracts have already appeared due to this program and new ones are expected. However, now the principles of providing assistance will change markedly.
Helping those in need
The emergence of the ERIP program is directly related to the events of recent decades. In the past, many European countries acquired Soviet / Russian-made weapons and equipment. In recent years, for one reason or another, some of them have decided to abandon such materiel in favor of products from other countries. However, limited financial capabilities do not allow the desired weapons to be carried out quickly.
In 2018, the US Department of State, together with European Army Command, developed and launched the ERIP assistance program. The essence of the program was to provide funding to support third countries. The State Department offered to help with the purchase of American-made weapons and equipment to replace Soviet / Russian products or locally made products.
In the first phase of the ERIP program, it was planned to provide assistance to six European countries - Albania, Bosnia and Herzegovina, Greece, North Macedonia, Slovakia and Croatia. The total cost of assistance is approx. $ 190 million. So far, these plans have been only partially fulfilled. New agreements are now being prepared for significant amounts.
Principles of cooperation
The State Department, the Pentagon and the American media openly talk about the main features and principles of ERIP, and also point to the positive consequences of such a program. With its help, Washington plans to receive financial, political and military benefits - by promoting its products and ousting competitors.
The program provides for the allocation of financial assistance for the purchase of a new type of weapon or equipment, which provides a significant part of the total costs. The remaining costs are borne by the partner country. Assistance is provided with the purchase of specific products and spare parts, with the training of personnel, etc.
The exact terms of cooperation are determined in each specific case, taking into account the capabilities of the partner country and the interests of the United States. So, in some cases, the purchase of equipment can be carried out equally at the expense of the State Department and a foreign country; in others, all materiel is purchased by a partner, and the United States pays for the training of specialists, etc.
Under the terms of the program, assistance is provided only when purchasing American-made products. In addition, the beneficiary undertakes to no longer purchase new Russian samples. At the same time, he is not prohibited from purchasing spare parts to continue the operation of available weapons and equipment.
It was originally planned that ERIP will finance the purchase of only ground equipment and helicopters. However, in the future, this list of products was slightly expanded, which made it possible to help another friendly country.
Foreign partners
The first phase of the ERIP program, launched in 2018, provided assistance to six countries. Three of them wished to renew the fleet of multipurpose helicopters. Albania and Slovakia have been allocated $ 30 and 50 million, respectively, for the purchase of UH-60 vehicles; Bosnia and Herzegovina receives $ 30.7 million for UH-1H helicopters.
The armament of Greece and North Macedonia consists of Soviet-designed infantry fighting vehicles. They were offered $ 25 and $ 30 million for the acquisition of American Bradley and Stryker. Another 25 million will go to help Croatia - it wants to replace the outdated M-80 infantry fighting vehicles.
Two more countries joined ERIP last year. Over the past few years, Bulgaria has been choosing a new fighter. Several foreign vehicles participated in its tender, incl. American aircraft F-16. For a number of reasons, he was not the favorite, but the State Department offered lucrative cooperation. Bulgaria was promised aid in the amount of $ 56 million, and this was a decisive factor. In the near future, the Bulgarian Air Force will receive eight new fighters.
In the fall of 2019, Lithuania announced its intentions to abandon the old Mi-8 and purchase six new American UH-60s. The State Department has raised $ 30 million through ERIP to fund the deal.
So far, out of eight ERIP participants, six have managed to conclude appropriate agreements. There are no agreements with Lithuania and Greece yet, but should appear in the near future.
New plans
A few days ago, it became known about the change in plans for ERIP. Previously, the program was planned to be implemented in stages. Within each stage, it was proposed to work with several partners at the same time. This approach was considered ineffective, and the program was rebuilt.
The State Department cancels the organization of the second stage. Instead, it is proposed to switch to cooperation with specific partners as they emerge. In addition, the European Command may be involved in the program. It will be able to allocate relatively small grants to certain countries to ensure the operation and maintenance of new materiel. The main costs will continue to be borne by the Foreign Ministry.
New agreements on assistance may appear in the very near future. It is already known about the negotiations with Latvia. In general, in the context of ERIP, the State Department is showing interest in the Baltic and Balkan countries. They still use a lot of Soviet-made equipment, and their transfer to other products can be very beneficial in all respects.
Costs and benefits
Several agreements have been signed as part of the ERIP program, incl. real contracts for the supply of military equipment of various types. It is already obvious that even the first stage of the program has fully justified itself. Through its actions, the State Department ensured the receipt of financial and political benefits.
According to known data, over the two years of ERIP's existence, the total cost of aid was approx. $ 275 million. At the same time, the American industry received orders with a total value of approx. 2.5 billion dollars. Most of these contracts stipulate the supply of modern aviation technology.
The main beneficiary in terms of contracts is Lockheed Martin. It will build eight F-16 fighters for Bulgaria, and its Sikorsky division will assemble UH-60 helicopters for three countries. The corresponding contracts provide for more than $ 160 million in US aid - not counting payments from customer countries.
The aid agreements provide for some restrictions, which could encourage a partner country to place future orders only in the United States, with obvious benefits to the latter. From this point of view, the ERIP program turns out to be a means of conquering new markets by ousting the main competitor in the person of Russia.
However, such steps no longer make much sense. According to the SIPRI Institute, of all ERIP recipients in 2010-2019. only Slovakia bought Russian equipment, and the total cost of deliveries did not exceed $ 10-12 million. All other countries have long stopped buying our products and have firmly entered the circle of customers of the United States and its allies.
ERIP is also important in the context of international military cooperation. Old models of equipment available to the participating countries do not meet NATO standards and impose significant restrictions of various kinds. Replacing them with American products will simplify interactions within the organization.
However, along with all the pluses, serious difficulties are possible. ERIP partner countries need help due to the weakness of their economies. As a result, there are obvious risks in the implementation of cooperation agreements. Whether Washington will be able to earn the desired 2.5 billion without difficulties and problems with paying for contracts is a big question.
Politics and economics
The State Department is implementing plans for ERIP under the slogans of helping European allies, countering the Russian threat, etc. At the same time, quite specific actions take place, leading to tangible results. Having invested $ 275 million, the United States got the opportunity to earn 2.5 billion, and also ensured itself the opportunity to receive new contracts.
Due to ERIP, the Russian industry is losing potential contracts for the supply of finished samples, although it retains the possibility of supplying spare parts. However, the consequences of this will not be fatal for Russian military exports to Europe, and so not the largest.
Thus, the implementation of the ERIP program allows the United States to make money on military supplies and more firmly tie existing customers to itself. In this situation, Russia loses almost nothing, although it does not gain anything. Time will tell how successful and useful the program will be for the European countries receiving assistance.
